Correlation Between Churchill Downs and International Game

Can any of the company-specific risk be diversified away by investing in both Churchill Downs and International Game at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Churchill Downs and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Churchill Downs Incorporated and International Game Technology, you can compare the effects of market volatilities on Churchill Downs and International Game and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Churchill Downs with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and International Game.

Diversification Opportunities for Churchill Downs and International Game

0.05

Correlation Coefficient

Churchill Downs  International Game

Significant diversification

The 3 months correlation between Churchill and International is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Churchill Downs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Churchill Downs Incorporated are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Churchill Downs i.e., Churchill Downs and International Game go up and down completely randomly.

Pair Corralation between Churchill Downs and International Game

Given the investment horizon of 90 days Churchill Downs Incorporated is expected to generate 0.9 times more return on investment than International Game. However, Churchill Downs Incorporated is 1.11 times less risky than International Game. It trades about 0.06 of its potential returns per unit of risk. International Game Technology is currently generating about -0.08 per unit of risk. If you would invest  12,077  in Churchill Downs Incorporated on January 26, 2024 and sell it today you would earn a total of  262.00  from holding Churchill Downs Incorporated or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Churchill Downs Incorporated  vs.  International Game Technology

Churchill Downs rporated

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Churchill Downs is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

International Game

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Churchill Downs and International Game

The main advantage of trading using opposite Churchill Downs and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, International Game can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in International Game will offset losses from the drop in International Game's long position.

The idea behind Churchill Downs Incorporated and International Game Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.